Michael Jackson, Prince and Whitney Houston each revolutionized the music industry and impacted popular music for decades. We all appreciate how Michael Jackson moonwalked across the stage, Prince made it (purple) rain and Whitney Houston will always love you. These impactful artists changed, and continue to change, the music landscape. What do Michael Jackson, Whitney Houston and (possibly) Prince have in common? The Internal Revenue Service (“IRS”) is interested in their ability to continue to profit from the music industry through royalties, released music, unreleased music and the use of image. What is the value of the right to use an image, sell music, earn royalties and benefit from intellectual property after death?
Both Whitney Houston’s and Michael Jackson’s estates are engaged in tax litigation with the IRS. The IRS valued Whitney Houston’s assets at around $36 million, whereas the estate valued the assets at $13.9 million. Among other things, the IRS asserts that royalties, publicity rights and intellectual property are worth approximately $22 million more than the estate’s valuation. In Michael Jackson’s case, the numbers are much more substantial, and much farther apart. The IRS valued Michael Jackson’s estate at $1.32 billion, while the estate asserted that the value was only around $7 million. For the posthumous image and likeness, the IRS valued those rights at $434 million, and the estate valued Michael Jackson’s publicity rights at $2,105. The Michael Jackson case is docketed for trial in February 2017. Continue Reading